Daily Market Analysis 5th February, 2015

Tomorrow sees the most important event of every month; the Nonfarm Payroll (NFP or Employment Change) will be announced. In more detail, this is the total nonfarm payroll accounts for roughly 78% of the total labor force who produce the complete gross domestic product (GDP) for the United States of America. The nonfarm payroll statistic is reported on a monthly basis, always falling on the first Friday of every month. Mostly this report is used to assist government policy makers and economists determine the current state of the economy and predict future levels of economic activity for that month.

Nonfarm Payroll defined: A figure researched, documented and reported by the U.S. Bureau of Labor Statistics, intended to symbolize the entire number of paid U.S. employees of any business, excluding the following workers:

Farm employees

Private household employees

Employees of nonprofit organizations that provide assistance to individuals

General government employees

This monthly report also includes estimates on the average work week and the average weekly earnings of all nonfarm employees.

So what does this all mean for our trading day on Friday? The ADP (Automatic Data Processing) report specified that the sharp drop in crude oil prices was already having an effect on the labor market, with businesses in the energy and supplying industries holding back work and payrolls. Thus, businesses benefiting from the lower prices have been slower to increase their hiring. This is something we are more than likely to note in the NFP report tomorrow morning. The forecast is reflecting a 21K drop from the previous month being at 252K. This affects the buying power of the average citizen, as this is a decline of 21K in the total labor force, which is relied on to produce the entire GDP for the USA. The market is predicted to close at 231K, let’s see what happens…

I do see this immediately affecting the strengthened USD for the beginning of the weekend, Monday may also see a slight drop. The USD has withstood the drop in oil, the Euro (EUR) as well as the Great Britain Pound (GBP), over the past few months. However, there may be a recovery already by Tuesday / Wednesday next week.

Tomorrows Binary Trading Tip:

Personally I will keep a CALL on the USD/EUR, and still a PUT on Oil. I do not hold many high hopes for this commodity. I do believe that the NFP will affect the USD immediately on Friday. However perhaps by Monday I will hold off trading this newly successful currency.

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